Gold (XAU/USD) faced renewed selling pressure during the Asian session on Friday, slipping to the $3,030 range and edging closer to its overnight low. The U.S. dollar (USD) maintained its bullish momentum for the third consecutive day, prompting traders to reduce their gold positions ahead of the weekend. However, underlying geopolitical and economic concerns continue to support gold, keeping it on track for a third straight weekly gain.
Market Drivers: USD Strength and Geopolitical Tensions
The USD’s rebound from multi-month lows has put pressure on gold prices. Investors remain cautious amid concerns over former U.S. President Donald Trump’s proposed reciprocal tariffs, set to take effect on April 2, alongside existing 25% tariffs on steel and aluminum.
Geopolitical risks also remain elevated. Russia and Ukraine escalated aerial attacks on Thursday, with Ukraine striking Russia’s Engels airbase in the Saratov region, while Russia launched 171 drones over Ukraine. Additionally, Israel resumed heavy strikes across Gaza, breaking a ceasefire with Hamas that had been in place since late January.
Federal Reserve Outlook and Gold’s Support Levels
Expectations of Federal Reserve rate cuts are limiting the USD’s gains and cushioning gold’s decline. The Fed has signaled two 25-basis-point rate cuts this year, with markets anticipating easing measures in June, July, and October. Fed Chair Jerome Powell also warned that tariffs could slow economic growth, increasing the likelihood of monetary policy adjustments.
Technical Analysis: Key Levels to Watch
Gold’s recent dip appears to be driven by profit-taking following its rally to an all-time high of $3,058 on Thursday. While further declines are possible, the $3,000 psychological level is expected to provide strong support. A break below could trigger further selling, potentially dragging gold toward $2,980, with deeper losses targeting $2,930 and $2,900.
On the upside, a sustained break above $3,057 could reignite bullish momentum, reinforcing gold’s three-month uptrend and paving the way for fresh highs.
